Macy's(US:M)2026-03-27 20:06Financial Performance - Net sales for fiscal 2025 were $21,764 million, a decrease of $529 million or 2.4% compared to 2024, primarily due to store closures contributing approximately $700 million in annual net sales in the prior year [164]. - Comparable sales on an owned-plus-licensed-plus-marketplace basis increased by 1.5% in 2025, compared to a decline of 0.9% in 2024 [164]. - Macy's comparable sales were up 0.4% on an owned-plus-licensed-plus-marketplace basis, while go-forward business comparable sales were up 0.6% [162]. - Bloomingdale's achieved a 7.4% increase in comparable sales, marking its highest growth in 14 quarters [162]. - Bluemercury recorded its 20th consecutive quarter of comparable sales growth, driven by expanded brand partnerships [160]. - Net income for 2025 was $642 million, with diluted earnings per share of $2.32, compared to $582 million and $2.07 in 2024 [197]. - Adjusted EBITDA for 2025 was $1,842 million, down from $1,977 million in 2024, while EBITDA increased to $1,873 million from $1,760 million [199]. Expenses and Costs - Gross margin for 2025 was $8,267 million, representing 38.0% of net sales, a decrease of 40 basis points from 2024 [166]. - SG&A expenses decreased by $90 million or 1% from 2024 to 2025, totaling $8,240 million, which is 36.4% of total revenue [167]. - The company recognized impairment, restructuring, and other costs of $230 million in 2025, primarily related to its Bold New Chapter strategy [169]. - Impairment, restructuring, and other costs amounted to $230 million in 2025, compared to $171 million in 2024 and $1,027 million in 2023 [199]. - The company recorded pension settlement charges of $67 million in 2025, up from $46 million in 2024 [199]. Cash Flow and Capital Expenditures - Net cash provided by operating activities increased to $1,430 million in 2025, up from $1,278 million in 2024, primarily due to working capital changes [180]. - Capital expenditures for 2025 were $740 million, focused on digital and technology investments and omni-channel capabilities, with plans for approximately $800 million in 2026 [182][183]. - The company repurchased 17.7 million shares at an average cost of $14.21 per share for a total of $251 million in 2025, with $1.1 billion remaining under the share repurchase authorization [186]. Tax and Debt - The effective tax rate increased to 24.4% in 2025 from 23.7% in 2024, influenced by state and local taxes [174]. - The company completed debt transactions in 2025, including the issuance of $500 million in senior unsecured notes and the redemption of $393 million in senior notes [190]. - Net interest expense decreased by 16% to $97 million in 2025, driven by reduced average outstanding debt balances [173]. Pension and Market Risk - The company did not anticipate making funding contributions to the Pension Plan in 2026, having made no contributions in 2025 and 2024 [211]. - The assumed annual long-term rate of return for the Pension Plan's assets was increased to 6.00% as of January 31, 2026, from 5.50% in 2025 [213]. - The company discounted its future pension obligations using a weighted-average rate of 5.23% at January 31, 2026, compared to 5.52% at February 1, 2025 [214]. - The company is exposed to market risk from changes in interest rates but has determined there was no material market risk exposure as of January 31, 2026 [218]. - The company manages interest rate risk through regular operating and financing activities, utilizing fixed-rate instruments for borrowings [218]. Other Developments - The company opened a new fulfillment center in China Grove, incorporating automation and AI to enhance supply chain efficiency [162]. - Digital sales accounted for 35% of net sales in 2025, up from 33% in 2024 [164]. - The company recognized $328 million in income from the settlement of credit card interchange fee litigation in 2025 [170]. - The company ended 2025 with cash and cash equivalents of $1,246 million, down from $1,306 million in 2024 [178]. - The company has approximately $6.0 billion in future operating lease obligations due after 2030 and $3.6 billion in other obligations, primarily merchandise purchase obligations [181]. - The company paid dividends totaling $197 million in 2025, with a declared quarterly dividend of 19.15 cents per share for 2026 [184][185]. - The company continues to monitor key inputs to the fair values of its reporting units, indicating potential for future impairment charges [209].